Reduced VAT rate leads to job creation in Westmeath

Athlone Advertiser, Thu, Aug 16, 2018

A recent report published by the Restaurant Association of Ireland (RAI ) has revealed that 1,441 new jobs in the accommodation and food services sector have been created in county Westmeath since the introduction of the reduced VAT rate of nine percent in July 2011.

The Restaurants Association of Ireland is urging Government to retain the nine percent VAT rate for the tourism and hospitality industry as they believe it has improved the competitiveness of the sector, while ensuring the viability of many small businesses that have been going through challenging times. The RAI is asking Minister for Finance and Public Expenditure, Paschal Donohoe T.D, not to return the a VAT rate of 13.5 percent

In Q1 2018, it is estimated that 3,190 workers were employed directly in the accommodation and food services sector in County Westmeath. The total gross annual wage paid to those workers was €73.9 million. The total net annual wage paid to those workers was €65.6 million. The payroll taxes accruing to the exchequer from this employment was €16.3 million. Indirect employment as a result of direct employment in the sector is estimated at 1,467.

Total employment in the accommodation and food Services sector in county Westmeath increased by 987 between Q2 2011 and Q1 2018. The total gross annual wage paid to those extra workers is €22.9 million. The total net annual wage paid to those extra workers is €20.3 million. The payroll taxes accruing to the Exchequer from this extra employment is €5 million. Indirect employment as a result of the change in direct employment in the sector is estimated at 454.

Due to this significant increase in employment in between Q2 2011 and Q1 2018, the total gross annual wage paid to those extra workers has amounted to €1,260 million. The total net annual wage paid to those extra workers is €1,118 million and the payroll taxes accruing to the Exchequer from this extra employment was €278 million.

There has been strong growth in the number of overseas trips to Ireland since the nine percent VAT rate was introduced in July 2011. Between 2011 and 2017 there has been an increase of 52.7 percent in the number of overseas visitors to Ireland. This growth is due to a number of factors, but the impact that the reduced VAT rate has had on the competitiveness of the Irish tourism product is significant. This increase in visitor numbers, resulted in an increase of €1.97 billion in overseas tourist expenditure.

The 2018 report recognises tourism as Ireland’s most important indigenous sector, providing considerable employment across Ireland. In the context of a country where there is a strong imperative to boost employment and economic activity, the ongoing health of the sector is of vital importance. The RAI believe that the lower VAT rate is an important component of the tourism sector and the introduction of an increased VAT rate would only serve to undermine the competitiveness of the industry and the viability of many small businesses across Ireland.